A judge has ruled against investor Alcon Research on the matter of blocking investee Aurion Biotech from debuting on the public market, a decision Alcon says it will move to appeal.
Cell therapy company Aurion filed documents Jan. 24 detailing plans to debut on the New York Stock Exchange despite the pending lawsuit from Alcon Research, a subsidiary of eye care giant Alcon.
In the suit, Alcon argued that its rights were being violated by Aurion’s plans to go public. Aurion countersued, claiming that the investor was trying to trap the biotech so it could buy Aurion at a low price.
Now, a judge has determined that Alcon’s consent is not required for an Aurion IPO, writing that the investor’s “argument is illogical in light of the parties’ contractual scheme,” according to a decision filed Jan. 27 (PDF) in Delaware’s Court of Chancery.
In 2022, eye disease biotech Aurion raised $120 million in a series C round led by Deerfield Management, with participation from Alcon Research, which invested $40 million in exchange for 36% of the series C shares, according to court documents.
After the first tranche of the investment closed, Aurion’s board consisted of six members, with Deerfield and Alcon each designated one director.
Aurion then launched an unsuccessful auction to sell itself, according to court documents, garnering interest from Alcon during the process. In November 2023, Alcon offered Aurion a deal that would provide financing for regulatory milestones in exchange for the option to buy the biotech later at a preset price. Negotiations over the option deal continued through October 2024.
Meanwhile, Aurion began contemplating going public, according to court docs. During a quarterly meeting held in June 2024, the biotech’s board voted to pursue an IPO, with all directors except Alcon’s designee voting in favor of forming a special committee to negotiate the terms of an IPO.
The special committee took the reins, which excluded Alcon from progress updates, according to the court documents. Alcon asked to have a board designee on the committee, but the request was denied. In July 2024, Alcon said it wouldn’t agree to an IPO and that it was focused on the possible option deal.
A mid-October board meeting was the first time Alcon learned about the continuing IPO plans since the June meeting, according to court documentation.
Alcon filed its legal complaint against Aurion on Oct. 28, arguing that Alcon’s series C consent rights gave the investor the ability to block Aurion’s reverse stock split, which the biotech undertook to free up authorized shares to sell in the IPO. The new judgement sides with Aurion with respect to the reverse stock split.
“We are disappointed with the court’s ruling that Aurion was not required to obtain Alcon’s consent to conduct a reverse stock split—a post-litigation maneuver enacted by Aurion,” an Alcon spokesperson told Fierce Biotech. “Alcon respectfully disagrees with that ruling and will appeal it. Alcon remains committed to the long-term interests of Aurion and its promising technology.”
In its lawsuit, Alcon also raised an issue regarding its ability to vote its full share of ownership, which grew to 40% through an October 2024 share purchase. On this issue, the judge ruled Alcon "has the right to vote its full block of stock."